The Innovation Toolkit

Even in a tough economy, there's one thing you can count on to keep your business afloat: Innovation. We asked these entrepreneurs and experts to reveal the secrets of their success-and how you can use their experiences to your advantage.

In a difficult economy, when small businesses have trouble finding capital, health insurance and nearly everything else, there is one element of business success that can still be had on the cheap: innovation. According to most economists, innovation remains probably the most important component of small-business success. Despite the downturn, smart companies are pouring more into research and development, and small businesses that continue to innovate, even in highly competitive fields, don't only survive, but thrive.

Here, then, are 18 how-tos of innovation every entrepreneur should consider.

How to convince people they need your innovationKarl Jacob
Over the past year, many different technologies have come out for fighting spam. Using traditional advertising to differentiate yourself in such a crowded market just doesn't work. Instead, we make sure all the technical people at the big companies, like IBM, get a free copy of our software. Once people see the techs using it, they assume it's the best product and start using it themselves.Karl Jacob is the CEO of Cloudmark, a company that develops spam-fighting technology.

How to translate your ideas to foreign marketsJenny Hsui-Theleen
So many American companies just jump into foreign markets without a plan. Don't bring your business plan in and then hire people. Hire people on the ground first who can make your idea happen, and then bring your plan over.Jenny Hsui-Theleen is the founder of ChinaVest, a venture capital firm focusing on China.

How to take advantage of new innovationsBobbi Hansen
A lot of travel agents see the Internet as the innovation that is going to put them out of business. But why not draw on people's belief that the Internet always delivers lower fares, and advertise you can beat Internet fares? That bold statement draws customers. Then you deliver lower fares, and you have them. We check our internal booking engines so frequently, we get better fares than the online sites. Clients are shocked we can [beat] the Web, and they become repeat customers.Bobbi Hansen is the president of Sunflower Travel.

How to create a new productRangaswamy Srinivasan
Allow everything in the environment around you to trigger ideas. In November 1981, I worked for IBM, working with lasers, cutting organic plastics. I was sitting at my Thanksgiving dinner table, staring at the turkey, and suddenly I wondered how a laser would cut organic matter like a turkey-or a person. I stashed a turkey leg and went into my office the next day. With no one around, I used the laser to slice through the turkey leg and then looked at the results under a microscope. I found it cut right through and could remove tiny bits of material without causing heat burns to the tissue. From there, I developed the idea of using lasers to cut eyes.Rangaswamy Srinivasan invented laser eye surgery and is the 2002 inductee into the Inventors Hall of Fame.

Competing Against the Big Guys & More

How to survive in an industry dominated by big companiesBruce Frimmerman
You can be inventive in the executive recruiting business and still [have] no customers because the industry is dominated by large companies. We target midsized companies, and we hammer over and over the advantages we have over big firms. As a small company, identify one thing you do better and then hammer at how much better you can do that task.Bruce Frimmerman is the president and CEO of executive recruiting company Recruit Masters Inc.

77%
of CEOs at America's fastest-growing companies say they are more innovative than their competitors.Source: PricewaterhouseCoopers

How to encourage employees to innovateArnold Sanow
Don't let them be automatons. The best companies take the risk of letting their employees make major decisions involving decent sums of money. At McDonald's, the employees don't come up with new ideas because they are not allowed to make a decision about anything important without consulting the manager first. At Home Depot, any employee on the floor can make a decision about whether to discount a product or whether to change something they think is marked wrong. Some of these decisions can cost thousands of dollars. It's not surprising that Home Depot gets many new ideas from ordinary workers.Arnold Sanow is a business strategist and the author ofMarketing Boot Camp(Kendall/Hunt Publishing).

How to get the world to take your ideas seriouslyJayson Meyer
When I moved into doing very specialized health-care software work, I got respect. If you make the effort to master an industry, such as health-care software, that demands that you know a large amount of specific detail. People will take you seriously because the barriers to entry are high. Even if you are in an industry that requires less specialization, dedicate yourself to gaining mastery of some specialized details, and you will get respect.Jayson Meyer is the co-founder of Meyer Technologies/WorkSmartMD.

How to anticipate the futureMichael Zey
Let the consumer lead you in anticipating the future. So many entrepreneurs come up with a technology and become wedded to it and wedded to how consumers should use it. But they don't anticipate that consumers might use it in different ways than they had intended. The makers of baking soda made it as a baking product. But they knew that consumers could help them anticipate the future, so they put a note on the sides of baking soda cans that said "If you have other ideas for how to use this product, let us know." And that's how we wound up also using baking soda to fight odors.Michael Zey is a futurist and the author ofFuture Factor.

42%
of innovative companies plan to make substantial new business-growth investments in the next 12 months.Source: PricewaterhouseCoopers

How to reinvent commonplace technologyHettie Herzog
Don't try to just improve on existing technology and market your product as such. You have to start from scratch if it's an idea or a product the public is already extremely familiar with. Then you have to advertise your new product as totally different from the existing technology; don't remind consumers of the existing thing, but convince them you offer a new experience.Hettie Herzog is the president of Automated Distribution Tecnologies Inc., a developer of a fully automated kiosk that dispenses up to 200 different items.

How to brainstorm successfully"Cactus" Jack Barringer
Go to sleep. There's nothing like your subconscious [for] brainstorming. I identify a problem I think needs to be fixed, tell my mind to focus on it, and then I take a nap in the afternoon. I keep a pad by my bed and wake myself up and write down what comes to mind. This is how I have come up with hundreds of brainstorms."Cactus" Jack Barringer is the founder of Reality Sports Entertainment Inc. and the inventor of a dozen products.

How to break the rulesRobert Sutton
Successful innovation must include doing things everyone will tell you is a terrible idea. Among stupid ideas, I suggest hiring some slow learners. People who are slow to understand how things are done in your organization, whom you might even dislike, often are the ones who come up with new ideas.

Every few months, do the most random thing you can at your business, without picking something that would wreck your company. Human beings naturally have a positive emotional reaction to things we see every day and a negative one to new things. When we do random things, we overcome that negative impulse against new ideas.

Don't think about big ideas. Most successful entrepreneurs, like George Zimmer, owner of The Men's Wearhouse, take an idea and make it only a tiny bit better, but then do that tiny extra bit incredibly well.

Encourage your staff to ignore their superiors. A Navy admiral once approached me at a conference and told me most of the great innovations in the Navy over the past century came from people who would have been court-martialed for disobeying superiors while they were working on their projects.Robert Sutton is the author of the bestselling bookWeird Ideas That Work.

Get Creative, Go With Your Gut & More

How to win government grants for innovationJeff Hoffman
The federal government's Small Business Innovation Research program alone gives out more than $1.5 billion in grants and contracts per year. But the grant process is competitive, and entrepreneurs often don't get far in it. Keep grant proposals small and specific, and demonstrate that you [not] only have an innovation, but that you have someone in your organization who understands how to bring an innovation to market. Bring in an outside professional who has experience [with] marketing ideas.Jeff Hoffman is the president and CEO of Danya International Inc., an education company, and winner of 23 Small Business Innovation Research grants and contracts.

Small companies have13-14
times
as many patents per employee as large companies.Source: CHI Research Inc. for the SBA Office of Advocacy

How to overcome barriers to creativityMichael Michalko
Require that everyone in your company bring a new idea as his or her ticket to a meeting. The meeting can't start until everybody has punched their tickets.Michael Michalko is the author ofThinkertoys.

How to get an early start on entrepreneurshipBonnie Drew
Children and teens are better at generating innovation than adults because they haven't failed many times in life and they don't put up barriers around themselves. If you have a kid who shows potential, you need to make entrepreneurship as much of a game for them as possible; it makes it easier for them to overcome obstacles they face. Then they see the obstacles as part of the fun, and they see there will be a way of getting past obstacles and reaching the finish line.Bonnie Drew is the senior executive vice president of Young Biz Inc., a company that trains young entrepreneurs.

How to go with your gutBilly Shire
In the toy and collectibles industry, you have to use bad taste. I go to gift shows, toy shows and flea markets and look for items that trigger my bad taste. They have to be well-done tasteless things-things Americans will love. In the 70s, I started buying old tiki bamboo furniture and tiki shirts from tag sales. It hit the right balance of kitsch-it conjured up images of 1950s American couples sipping mai tais in the backyard-and it was a huge seller in my store. Now, chains like Crate and Barrel sell Polynesian furniture, and Target sells tiki shirts.Billy Shire owns Wacko toy store.

Innovation from small business isTWICE
as closely linked to scientific research than that of large businesses.Source: CHI Research Inc. for the SBA Office of Advocacy

How to take an alternative innovation mainstreamTom Mitchell
Astrology has a big marketing problem: People don't always take it seriously. We want to show astrology is a mainstream tool for understanding business. To do so, we show clients the science behind astrology to show that it's verifiable. We show how astrologers have created a database of information about people's behavior based on their birthdays and other factors. We stress how this database is no different than other databases and how it can be used by personnel managers; and we talk about how astrologers' research is as scientific and quantitative [as any other scientific discipline].Tom Mitchell is the co-founder of Jupiter Returns, a company that promotes astrology as a practical tool for improving businesses.

How to sell a VC on your innovationsAndrew Zacharakis
To show VCs you can generate returns that make risks worthwhile, you must demonstrate you understand how costs stack up when your business expands. Entrepreneurs often come to a VC with a business plan that projects millions in revenues, but lists a future staff of only 15 people. Those who provide a reasonable plan that shows potential liabilities and that includes benchmarks against other companies, will be more likely to raise capital.Andrew Zacharakis is an associate professor at Babson College and a venture capital specialist.

How to promote your innovationsRob Levinson
Get invited to speak at as many conferences and academic events as possible. When you appear as a speaker, it gives you the aura of an expert and makes any ideas or innovations you talk about seem credible. A few weeks ago, I participated in a seminar in Boston. Afterward, four people in the audience approached me asking for my services. If I had cold-called them, they wouldn't have answered.Rob Levinson is the founder of RL Strategies, a marketing and public relations consulting firm.